Due diligence issue

I’m in due diligence on on park, and just got the phase 1 report back. I was told and believed that the park is on septic, but the report stated that the property also has a “greywater lagoon”. My question,
Is it normal to have septic and a lagoon? I was under the impression that if you have septic tanks you shouldn’t need a lagoon. I’m sure someone has some insight on this, so that why I’m asking on here.

Thanks everyone!

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There are a lot of smart private utility guys on here that will probably chime in but you have two types of discharge, black and grey Usually , both route to the same pipe. Based on what you are saying , it sounds like black is routing to septics but grey must have a separate discharge that it is going in to some type of collection but only compromised of grey water. I have seen a similar setup like you are referencing one time and best we could tell, this particular one , was not compliant ( multiple issues). Def make sure whatever is going on is compliant . This would all be my best guess based on what you provided.

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+1 to @Deleted_User_ME comment.

I have seen septic for initial blackwater, and the lagoon for secondary graywater. This Park was in Louisiana and had a 3rd party that apparently “owned” the septic systems and land for the lagoon so the Park claimed there was no liability and the service was billed to the tenants monthly.

It sounded nice, but we couldn’t’ agree on price so I never investigated it further to determine if this was a legit setup or a pig wearing lipstick.

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Pull up google earth look for a pond. When I hear septic the assumption is tank and drain field. Lagoons can be classified according to their primarily purpose: treatment, clarifier (sedimentation), disposal (infiltration), storage. Usually multiple activities happen in the lagoon depending on design. In the septic (tank and drain field) system the tanks primarily for sedimentation (solids removal) drain field is oxygen rich and provides primary treatment and disposal. So my point is “gray water” lagoon in a septic system is just a nice way to say you have treatment going on in the lagoon but we removed the solids so dont worry about having to replace the lagoon when it fills up with solids.
More going on here than meets the eye. My guess is tanks are used for sedimentation, then primary treatment (google Facultative lagoons) takes place in the lagoon but who knows. Time for more due diligence.

Phillip Merrill

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Anyone have any recommendations on who I should contact to start uncovering what’s going on here? Maybe the county?

Yes get copies of the permits for septic and lagoon from the county, city, state authority for your location. Should be able to see compliance / testing issues for them based on this from the same entity.

Also get the MHU Due Diligence manual to cover all your bases. It covers risks, legalities of private utilities like this:

http://www.mobilehomeuniversity.com/mobile-home-park-investing-books-and-courses/mobile-home-park-due-diligence-manual.php

Park is out of city limits, so called the county that its in and they have no record of the septic or lagoon. The county official said that unless the system was put in post 1995 there would be no records of it, and the park was developed in the 70’s. Really not sure where to go with this.

I’m just shooting off the cuff, but I’d go ask the county what’s required for a new permit and see what it would take (both in paperwork and actual work) to get the thing up to “current code.”

I feel like a lot of DD can be conducted at the political HQ (county or city) just by seeing how helpful they are. If they are not helpful to you during DD, it’s probably not going to get any better when you have to deal with the local jurisdiction for all the things that come up when operating a MHP.

Brandon@Sandell

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The owner of the park should provide you with the following:

As built plans
Specs on capacity of system…
DEQ or equivalent permit
Copies of all lab work (usually done at least monthly)
Flow data daily or monthly at a minimum.
Results of any inspections
Maintence records
Annual operation budget for last 3 year
Names of service providers who have worked on system.

If the owner has none or very little of this run dont walk the deal

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You need 100% certainty a local, county, or state authority won’t shut you down for various reasons. If the documentation isn’t there then need to figure out what they can provide to show you’re compliant and there are no issues.

@PhillipMerrill has really good steer on the documentation…

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First question does the “treated” waste water discharge to any surface water? If so the system would be regulated by clean water act Federal law. Federal EPA usually gives authority to oversee at state level. If it discharges to surface water the clean water acts requires permit under National Pollutant Discharge Elimation System. NPDES permit is usually the most restrictive. If system doesn’t discharge to surface water it is usually up to state or county to regulate it.

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Think I’m going to have to walk on this deal. Just got report back from plumbing/septic pumping company. The park, which has 25 homes, is running on 8 septic tanks and 6 of the homes are on the lagoon. The plumber says that if the DNR was made aware of this they would force the owner to reduce the number of homes in the park to the correct capacity for the current sewage system, and that’s actually happening to another park in town. As a newbie in this business I overlooked this earlier in due diligence and after speaking with the plumber, I now realize that this is a major issue. Another major issue is that the county only allows 1 septic tank per acre so I would legally only be able to add around two more tanks which still wouldn’t be enough. I Was looking for more of a turnkey park since I’m new to this business, but this park is starting to look more and more like a major turnaround and I’m not paying a “turn around” price. Would you guys walk from this deal?

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This is a bargaining chip for renegotiation of the price. Find out if you can get set up on city sewer and see if you can get a nice price cut for the work.

Park is outside of city limits and there are no city sewer lines to connect to. My thought is That I could make an offer based on the number of homes allowed on 8 septic tanks by the DNR. This would protect me in the case that I was shut down, but the offer would be probably insulting to the seller.

The issue is exactly how many homes will be allowed on the existing tanks. Unless you have a permit from the DNR in your hands that tells you how many you are allowed how can you even make an offer.

Call the DNR get a copy of the permit and get to the bottom of this. Sounds like part of the system is bootleged.

The real issue is the 26 homes (or more likely alot less than 26). There is not likely to be the economy of scale needed to deal with a lagoon, private well, and septic tanks.

Good job taking the right steps to uncover this. You have new battle scars to serve you well for future deals. :wink:

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